On 5 January 2021, the Cyprus Tax Department (CTD) issued two announcements on the local implementation of Council Directive (EU) 2018/822 on the mandatory automatic exchange of information in relation to reportable cross-border arrangements, more generally known as DAC 6.
The first announcement is general in nature and indicates that the authorities intend to transpose DAC 6 into national legislation during January 2021, guidance on the implementation and application of DAC 6 is expected soon after from the CTD. Of course, transposition in Cyprus is significantly late from an EU perspective as DAC 6 legislation should have been implemented at the end of 2019 by member states. That said, better late than never.
The announcement also contains a brief outline of the criteria set out by DAC 6, by which an arrangement should be assessed so as to determine whether it should be considered as being a reportable cross-border arrangement (RCBA) and the information that should be submitted in the instance that such a determination is made. For more detail on the content of DAC 6 please refer to our earlier insight article here.
The CTD announcement ends with a reminder of the numerous reporting deadlines and with instructions on how to register to the web portal “Ariadni”, wherein the reports containing the applicable information should be submitted.
A second announcement on reporting arrangements is shorter, though not necessarily sweeter, than the first. Here the CTD reminds stakeholders that:
- Despite the fact that there is no legislation the CTD has actually started registering intermediaries and taxpayers on Ariadne so that they may been preparations for DAC 6 compliance.
- As with CRS/FATCA once the registration is completed intermediaries and taxpayers may submit reporting by uploading XML files.
For what it’s worth, the CTD mentions that because the DAC 6 legislation is not in place in Cyprus the submission of DAC 6 information will occur for the time being on a voluntary basis until it becomes mandatory in line with the adoption of the relevant DAC 6 legislation.
A sting in the tail on client confidentiality
Intermediaries beware however, the disclosure of DAC 6 information to the CTD on a “voluntary” basis may amount to a breach of confidentiality obligations owed to underlying clients – since there is no requirement under applicable law to make disclosures at present and terms of business often provide intermediaries with the ability to do so where this is in accordance with “obligations under applicable law”.
Tax Department’s announcements are currently only available in Greek and can be found here, and a link to the announcement on reporting is here. An unofficial English translation prepared by our team of the longer announcement can be found here.